The Christie administration has approved the merger between shore-based Meridian Health and Raritan Bay Medical Center in Middlesex County
TRENTON -- The Christie administration has approved the merger between shore-based Meridian Health and Raritan Bay Medical Center in Middlesex County, the hospitals' CEOs announced Monday.
The deal extends Meridian's reach from Monmouth and Ocean counties into Middlesex County for a combined market of 1.5 million patients. Raritan Bay's hospitals in Old Bridge and Perth Amboy will be operated by Meridian, which owns Jersey Shore University Medical Center, Neptune; Ocean Medical Center, Brick; Riverview Medical Center, Red Bank; Southern Ocean Medical Center, Manahawkin; and Bayshore Community Hospital, Homdel.
After an eight-month review, the state Health Department and the Attorney General's Office last week approved the deal, determining the merged hospitals would keep vital health services intact and benefit the community. A Superior Court judge gave final approval to the merger on Dec. 30 to take effect on Jan. 1, Meridian President John K. Lloyd said.
Raritan Bay Medical Center, Meridian Health at Jersey shore sign merger
"We are very excited to welcome the trustees, physicians, nurses, team members, and volunteers of Raritan Bay Medical Center to the Meridian team," Lloyd said. "The merger of Raritan Bay with Meridian will better position our organizations for the future, with continued growth of outstanding care throughout Monmouth, Ocean, Atlantic, and Middlesex counties."
Meridian, meanwhile, is awaiting the Attorney General's approval to merge with Hackensack University Medical Center under an agreement announced in May, Lloyd said. The Federal Trade Commission has declined to examine the deal for any potential monopoly issues so far, he added.
The mergers makes Meridian a more formidable presence as Barnabas Health, based in Essex County, and Atlantic Health headquartered in Morris County have gone on a hospital buying spree in the last several years.
Hospitals in New Jersey and across the country have engaged in a merger and acquisition frenzy since the Affordable Care Act was proposed in 2009. Fearing how they would survive the loss of billions in Medicare funding that was used to fund the landmark law, hospital CEOs have created bigger health care networks to buffer themselves from the losses.
The law - also known as Obamacare - also requires hospitals to de-emphasize costly inpatient care and encourages preventive care and outpatient services.
Meridian's acquisition of Raritan Bay means it will operate 2,300 acute hospital beds and have more than 81,000 annual inpatient admissions, according to the announcement. The merged non-profit entity will employ approximately 15,000 workers and 2,700 physicians, retaining all employees, Raritan Bay president Michael R. D'Agnes said.
"We do no anticipate any reductions in employee headcount. We need the resources to grow," D'Agnes said, adding, "We will have a strong and growing future in Middlesex County."
Lloyd called there expansion into Middlesex County "a natural" progression. "We believe in the future you need to deliver care in contiguous geographies. We have five hospitals, in addition to the children's hospital, and there was not much more we can do" in Monmouth and Ocean counties.
Because one non-profit entity is acquiring another, there is no purchase price, D'Agnes said. "There is a commitment to include us in their capital plan. We are capital-starved - we have not been able to reinvest."
Raritan Bay hospitals - which will retain their names - will receive a new information technology system, and a newly renovated emergency department at the Old Bridge facility, the CEOs said.
"We are looking at ways we can expand the clinical programs," Lloyd said. "All of these things take capital...When you are part of the Meridian family, you will get resources."
Whether hospital mergers benefit consumers is open to debate.
The Robert Wood Johnson Foundation concluded prices and insurance premiums rose after hospitals merged and gained more negotiating power, according to a 2012 report analyzing consolidations across the country. "When hospitals merge in already concentrated markets, the price increase can be dramatic, often exceeding 20 percent," according to the report.
These increases may be tempered in New Jersey, where one insurance company - Horizon Blue Cross Blue Shield of New Jersey - wields a lot of buying power, said Katherine Hempstead, a director at the foundation.
Horizon insures 3.8 million people in New Jersey.
Consumer may benefit when merged hospitals embark on innovative projects, but these "theoretical" improvements have not been easy to define, Hempstead said.
Lloyd said the merger with Raritan Bay was not driven by a desire to squeeze insurance carriers.
"I would say there is healthy tension between providers and insurance companies. all we want is fair rates," Lloyd said.
